Finance Minister Eugene Cox is on the offensive in Washington in an attempt to influence US lawmakers as they consider new tax legislation aimed at grabbing a bigger tax bite from US companies which set up shell corporations overseas.

A three-man team from the Finance Ministry flew to the US capital this week “to assess, and to the degree possible, influence the discussion on the proposed new tax legislation being considered by the US Congress”, a Cabinet press release said last night.

Today, Mr. Cox, Financial Secretary Donald Scott and Assistant Financial Secretary Ifor Hughes will finish the second of two days of meetings with various US authorities in an attempt to minimise the effects of the potential legislation on Bermuda.

The Island has come under high profile attack - with recent articles in the New York Times referring to the Island as the “tax haven of choice” - as US lawmakers band together to push “patriotism over profits” and discourage American companies from reincorporating overseas as a tax dodge.

In April, a New York Times article suggested that the legislation, which began as low-profile grumbling, has a strong chance of becoming reality in the post-Enron environment.

“The legislation is driven by public anger over the collapse of the Enron Corporation, which escaped millions of dollars in taxes by creating subsidiaries in countries that are tax havens, and has gained so much momentum that it stands a chance of becoming law this year, despite the opposition of Republican leaders in the House of Representatives and the lack of enthusiasm in the Bush administration,” wrote David Rosenbaum.

Legislators in both the US Senate and House of Representatives are pushing for the legislation.

Senate Finance Committee chairman Max Baucus (Montana) is a vocal advocate along with Iowa's Charles Grassey and, according to the article, bills with strong support from both the chairman the top minority Senator minority tend to ride smoothly through that government body.

Sen. Baucus has said he plans to bring the bill up for a vote soon and is “quite confident” the legislation can be passed into law this year. And in the House of Representatives, Republicans Richard Neal and Scott McInnis have put forward draft legislation.

While the bulk of the collapsed power giant Enron's subsidiaries were actually located in countries other than Bermuda - only eight of 881 were incorporated on the Island - lawmakers have pointed to large companies such as Stanley Works, Tyco and Ingersoll-Rand who have incorporated in Bermuda, or stated their intention to, as the debate has progressed, keeping Bermuda firmly in the US media spotlight.

The proposed legislation seeks to close the loophole whereby a company incorporates overseas and avoids taxes on the companies overseas income but some have suggested this strategy may not go far enough in stemming the tax drain as it would still allow companies to benefit from creating a new Bermuda triangle - using Bermuda as a headquarters while establishing a paper company in a third country with which the US has a tax treaty such as Barbados or Luxembourg.